Publicly, it’s bad actor clauses and horse racing concessions that are slowing down the process. Privately, a lot of people are wondering if this all a big kabuki dance, and if certain entities just don’t want online poker to pass, no matter how favorable the deal appears to be.
1) Not all tribes want online poker. 2) Not all cardrooms want online poker. 3) $60M is Thurston Howell type analysis. Good luck w this. 2/2
— Vincent Oliver (@tangerinelaw) February 16, 2016
The likely reason certain tribes and card rooms might be against online poker probably has to do with their concern over the hefty startup costs, the struggles of New Jersey, Nevada, and Delaware, and the belief that if they don’t launch an online poker room, they’ll put themselves at a competitive disadvantage against competitors that do jump into online poker.
This thinking is wrong.
Rather than a means of picking winners and losers in the California poker market, the proliferation of online poker will most likely be the proverbial rising tide that lifts all boats. This isn’t to say that the entities that spend the money and launch online poker sites won’t reap more benefits, but it’s important to note that online poker and live poker have a symbiotic relationship that goes beyond who’s operating the online poker sites.
Wherever online poker is available and popular, land-based poker rooms will reap the benefits – some more than others.
Even if a card room or a tribe has no intention of launching an online poker site, obstructionism is bad for the bottom line, and they should get behind legalization efforts.
The correlation between the rise of online poker at the tail end of 2003 (with the height of the poker boom occurring between 2005-2009) and just about every conceivable metric is hard to ignore. Whether it’s attendance at major tournaments, the number of brick and mortar poker rooms and poker tables, or the annual revenue those rooms generated, brick and mortar poker seems to ebb and flow with online poker:
The table above shows a clear rise from 2005-2009, when online poker was at its peak in the United States. It also shows a precipitous decline beginning in 2011, which just so happens to coincide with the government crackdown on online poker on April 15, 2011, dubbed Black Friday in the poker community.
And Nevada’s post-Black Friday poker decline isn’t an outlier.
In 2015, Kyle Kirkland, the President of the California Gaming Association (CGA), told me that poker traffic in California is, “down over 40 percent at some established card rooms since Black Friday.” Kirkland also singled out the lack of online poker as a key reason for this decline.
“Online poker was an easy way for new players to learn the game we all love,” Kirkland stated.
You might be thinking that this data is all well and good, but during the previous period of online poker plenty, the online poker operators didn’t have a brick and mortar presence in the United States. So, what happens in markets where brick and mortar operators are also the purveyors of online poker?
Do they dominate the market?
Do they put their competition out of business?
Unfortunately, we don’t have any data from a market where online poker has been successful, as Nevada, Delaware, and New Jersey are all low liquidity markets. But what we do have is a clear indication that online poker doesn’t predict brick and mortar winners and losers.
In New Jersey there are two casinos that operate both brick and mortar poker rooms and online poker rooms: Harrah’s/Bally’s and Borgata. The only other poker room in the market of consequence (most have closed) are Golden Nugget and Tropicana, both of which have an online casino but no online poker room.
A look at poker win in 2013 (online poker launched at the tail end of 2013) and 2014 (when online poker was available) shows little has changed in terms of market share among these casinos – poker win data for 2015 hasn’t been released by the New Jersey Division of Gaming Enforcement yet:
The increased market share in 2014 (particularly Bally’s) can be explained by the closure of the Caesars poker room, as well as the contraction in the market. But what is important to note is neither Tropicana or Golden Nugget seem adversely affected by not having online poker sites, as both maintained or increased market share.
In Nevada, where online poker is available but like New Jersey, a little-used product, Caesars has a veritable lock on online poker action. Yet Caesars hasn’t been able to turn this online poker monopoly into a competitive advantage for its brick and mortar poker rooms scattered throughout the state.
The renovated WSOP.com-branded poker room at Caesars Palace is nice, but lags well behind several other poker rooms in Las Vegas in terms of traffic, revenue, and name recognition.
Based on all available evidence – whether during the height of the unregulated online poker era or the current regulated online poker era – the fear that the lack of an online poker site will put operators at a competitive disadvantage seems unwarranted.Operators That Don't Want To Launch Online Poker Rooms Still Benefit From Regulation Steve Ruddock